A discussion of the principles of monetary policy in the context of economic and political history, thus seeking to illuminate both monetary theory and monetary policy. It draws on a wide range of sources, making use of the recollections of participants in policy-making during the years of the Thatcher governments. The authors advocate direct control of the monetary base (MO) with interest rates being left to find their market level; and they examine the policy debates under Margaret Thatcher that in the end frustrated this proposal.